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A disturbing new trend? UK hotels adding a service charge to your room rate

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Anyone who has travelled in Asia or the Middle East will be familiar with the concept of ‘++’ pricing. Any published rate you see for a hotel will come with ‘++’ after the price, meaning that you will also be subject to local taxes and a service charge. These are likely to add at least 20% to the total price.

This sort of pricing is illegal in the UK. Hotel pricing – and indeed airline pricing – must show all compulsory charges as part of the headline rate.

Up to a few years ago, IHG tried to get away with showing ex-VAT pricing for some London hotels on the grounds that ‘all of our guests are business travellers’. (You are allowed to show ex-VAT pricing if your advertising is aimed at the B2B market.) They don’t do this any longer.

Similarly, Trump Turnberry in Scotland had a short-lived compulsory ‘resort fee’ which was not shown in advertised pricing. This was soon stamped out.

A new enemy is now emerging in the UK, however – the ‘optional’ service charge on your room rate.

A reader recently stayed at Rudding Park near Harrogate. When he checked out, he was surprised to see a new ‘optional service charge’ of 3% of his room charge on his bill. This is separate to the service charge added to restaurant and bar bills in the hotel.

Because the charge is ‘optional’, it does not need to disclosed as part of advertised prices. It is shown in small print as part of the Rudding Park booking process.

Generously, the hotel website states that you should still feel free to leave a cash tip as well at check-out if you wish.

When our reader challenged the hotel about this, it said that ‘all the posh hotels in London are doing it’ and specifically referenced the Mandarin Oriental and The Connaught.

What this has to do with a provincial hotel in Harrogate is a different question, but it was correct. It turns out that the Mandarin Oriental in Knightsbridge now says:

Rates are per night and inclusive of VAT at the prevailing rate and subject to 5% discretionary service charge.

Over at The Connaught in Mayfair, the £618 rate for a standard room on a random day in November comes with (if you click the letter ‘i’ next to the rate):

“Rates exclude discretionary service charge at 5 percent

The brand new The NoMad London hotel in Covent Garden has also got in on the act:

“A discretionary 5% accommodation service charge will be added to your bill which is distributed amongst staff.”

To find this line during the booking process, you need to click the link which appears when you are asked to tick “I agree with the Booking Conditions” and scroll a long way through the page which appears. You will not see it otherwise.

The Ned, opposite the Bank of England, has joined in too – unsurprising as partially shares owners with The NoMad. Here you need to try even harder to find information on the charge, since there is no clickable link to take you to the booking conditions – you need to cut and paste a URL into your browser.

I don’t know if these charges are new or not. I have never paid a service charge on my room rate at a UK hotel. I wonder what happens if you book a prepaid rate? Are you given a bill at check-out for purely the optional service charge?

Given that hotels are currently benefitting from the reduced rate of 5% VAT until 31st March 2022, as well as substantially increased room rates due to post-lockdown demand (Four Seasons Hampshire now wants £750+ for a standard room at a weekend vs £350 pre-covid), adding a 3% to 5% service charge on the room rate is taking things too far.

One US hotel CEO has publicly said that he wants guests to start tipping on room rates because otherwise he will have to increase wages. With upward pressure on salaries in the hospitality sector due to a shortage of staff, the UK may be going the same way.

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Comments (250)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Tom C says:

    I have been staying at The Connaught regularly for over 10 years (200+ stays) and I cannot recall ever not seeing the service charge. It does at least go to all the staff though.

    • Doug M says:

      You’ve never seen it but know how it’s distributed? I’d have little faith the staff get it.
      Even if they do, anything that expands on wages through favour rather than legitimate means is a step backwards.

    • TGLoyalty says:

      I’ve had a look back in my emails and wasn’t charged this in March 2020.

      Perhaps they gave it to Emyr inclusive in the rate rather than discretionary

  • 1ATL says:

    Being discretionary, am I within my right to decline the opportunity to pay the service charge and have it knocked off my bill?
    I stayed at a SLH hotel in the UK a couple of months ago on a prepaid rate (booked at fairly short notice within the cancellation policy) and so my card was charged before we checked in. Upon leaving we got an incidental bill for our resort spend slipped under the door on the morning of check out with one of these discretionary charges applied. I did pay it but driving home it was niggling me that I should have challenged it. Would it have been likely it would have resulted in the charge being knocked off the bill do you think?

    • Crafty says:

      Of course, it’s discretionary. They rely on the embarrassment factor to avoid this in most cases.

      • cinereus says:

        Exactly. And the only game theory optimal strategic choice is to never start paying.

    • Char Char says:

      It is my company policy to not pay discretionary charges

      • Andrew says:

        It’s my personal policy too. I’ll look out for this and ask reception to remove if I see it.

      • Super Secret Stuff says:

        We are only allowed to pay upto 5% in the UK for “genuinely exceptional service”

      • TGLoyalty says:

        It’s my companies that only those that are “customary” should be paid and they have to be in keeping with general expectation ie 10% in U.K. 20% USA etc etc

  • 1ATL says:

    Why can’t the service charge be included in the room rate? Why does everything need to be itemised separately? How much longer until we see a housekeeping charge, a shower gel replenishment fee, a TV remote control battery levy? Where does it all end?

    • Craig says:

      Don’t forget the kettle cleaning fee?

    • Rantallion says:

      Discretionary means no VAT has to be accounted for on the charge – include it in the room rate and VAT becomes due on it.

      • lumma says:

        If the service charge is paid to staff it’s not subject to VAT, if the hotel or restaurant keeps it for itself they have to pay the VAT

    • Fraser says:

      Yes, for hotels which still charge for WiFi, I ask them what the charge is for hot water, electricity etc. (as these actually have a marginal cost to the hotel, unlike WiFi).

  • Jeff Greene says:

    “ One US hotel CEO has publicly said that he wants guests to start tipping on room rates because otherwise he will have to increase wages”

    That poor ceo having to increase wages in response to changing market conditions.

    Not going to book any hotel which has these charges.

    • tony says:

      The linked article is worth reading for the context – the CEO notes that people used to leave cash tips in room for housekeeping, but now society is increasingly cashless, that’s not happening. Obviously just paying people properly in the first place seems like a better solution, but….

      • kk says:

        still its inappropriate he the ceo isnt paying the staff well enough.

        i would be ashamed if i run a business and the customers need to tip for better servuce.

  • DP says:

    The Westbury had this back in December, too.

  • Nick says:

    Well I would be declining this on principle if nothing else. It’s up to the hotel to pay its staff properly, if they can’t then they need to either reduce profits or raise prices. Hopefully government will see sense and enforce inclusive pricing again by tweaking the rules to stamp this out as well.

    • Magic Mike says:

      This sort of behaviour is standard in the restaurant industry though, so are they going to ban it there too?

      • HBommie says:

        Good idea

      • Craig says:

        No tips in Japan.

      • Super Secret Stuff says:

        Difference is, you are buying a purely man powered service. E.g. they can make or break the experience and they determine if the food tastes nice.

        Hotels, you don’t really need to interact with the staff that much unless you have a problem. They aren’t actually adding any value beyond what is expected unless they make your towels into swans and remember what you’re up to to ask how you’ve been. That said it’s not an excuse for poor service, that just hacks me off

      • Dominic says:

        To be clear, I also expect restaurants to properly pay their staff. It isn’t for me to subsidise them.

        I should note, I generally do pay service charge in restaurants but *only* after confirming that it does in fact go to staff… should be illegal for it not to, but unfortunately it is not!

        • Memesweeper says:

          Until the pandemic I exclusively tipped in cash and asked for service charges to be removed. It’s the only way to be sure. I might need to get back into the habit…

          • The Savage Squirrel says:

            Agree; there’s no guarantees, but cash tips certainly improve chances of it going to staff from people I speak to in the hospitality industry…
            …Although the guy serving us who aggressively hustled for “cash tips only” at the Radisson Manchester Airport managed to downgrade himself in the process from the cash tip he was going to get to … nothing. 😀

  • Martin says:

    One thing I have noticed over the last few months is the number of hotels no longer servicing your room if staying for several nights. The reason given is ‘COVID’. No beds made, towels replaced or toiletries replenished unless requested. I wonder if this will continue going forward? You then have to pay an extra ‘service fee’ if you want this?

    • CarpalTravel says:

      Agreed, it’s a great excuse. We stayed at a Inn collection group place last month though and it was serviced daily and to an exemplary standard, so it can certainly be done. If anything, it is even more important to do so.

    • John says:

      I prefer to have housekeeping on request, but before covid declining housekeeping could result in extra points or a voucher to use at the bar/restaurant – that isn’t going to happen any more

      • Can says:

        This. No extra points anymore for declining it

      • Super Secret Stuff says:

        I think the future will be chosen by premier inn, if they ditch it the practice will become widespread. If they keep it, we could see a change back to how it used to work. Reusable toileries in dispensers are here to stay for good, one less problem for declining a service

        • Laura says:

          Stayed at a Premier Inn in August for four nights and no housekeeping. Had to go to reception for top-ups.

          Stopped at an Ibis more recently and they emptied the bins, gave us fresh towels etc but didn’t make the beds.

      • Genghis says:

        Was still going strong at HIX Inverness a couple of weeks ago.

        • Riku says:

          Scandic were doing this even a couple of years ago. You had to ask for daily housekeeping otherwise they would not come into your room to even empty the bins. They did not give any extra points for not doing housekeeping – unlike Sheraton who would give you more points for each night you declined housekeeping

  • Char Char says:

    The whole idea of stitching on additional charges is just a penny pinching tactic for businesses who feel they can take advantage, of their customers. If their service is premium then demanding a premium price upfront shouldn’t be an issue from the start, no need to add in random fees everywhere or expect tip unless you are desperate to get every penny.

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